Natrol Acquires Medical Research Institute

CHATSWORTH, Calif.—Natrol Inc. (NASDAQ:NTOL) acquired sports nutrition product provider Medical Research Institute (MRI) for an initial purchase price of $8.0 million in cash, as well as potential earn-out payments based upon the achievement of certain levels of EBIT (earnings before interest and taxes) over the next three years. In 2006, MRI recorded revenue of approximately $21.4 million with operating income of $3.1 million. It is expected that the transaction will be immediately accretive. Founded in 1997, MRI was the first to launch nitric oxide-based sports nutrition products and has a reputation for science and innovation in the sports market. Its products are primarily distributed through GNC. MRI has working capital of approximately $8.6 million including cash of approximately $4.0 million and no debt.

Natrol management stated the acquisition will help accelerate Natrol’s corporate development plan by creating scale, synergies and new avenues for growth. “We are pleased to have quickly identified and executed such a strong transaction with the capital we unlocked through the recent sale and leaseback of our corporate facilities,” said Wayne Bos, president and chief executive officer (CEO), Natrol (www.natrol.com), noting the goal is to improve manufacturing and logistics capabilities, expand into new geographic markets, and extend the MRI product lines. “We are especially excited to deepen an already talented management team, to continue to expand our portfolio of intellectual property, and to significantly reinforce our commitment to and capability for research and development. We believe this deal marks the onset of a new phase of our turnaround and are excited to demonstrate our capabilities to our investors.” Ed Byrd, the founder and principal shareholder of MRI—who has a track record in building highly successful businesses in the sports nutrition market and was a founder of EAS—will continue to serve as MRI’s chairman and head of research and development.